Taxes

The federal tax rate you pay will vary depending on your age.

False. It varies depending on your filing status.

All other factors being equal, waiting until which age would let you receive the most Social Security benefits?

70

When it comes to your taxes, what is the standard deduction?

A pre-set amount of money that you get to deduct

If you had more income tax taken out of your paycheck than you actually owe in taxes, what can you expect to happen?

A refund

If you are taking tax deductions for meals, car expenses, and travel, you are most likely _______.

A small business owner

Which of the following is true regarding tax credits?

A tax credit reduces the actual tax you owe.

Which of the following is true regarding tax credits?

A tax credit reduces the actual tax you owe. Within limits, a dollar of credit reduces your tax by a dollar.

What kind of retirement planning contributions can help you save money on filing your taxes currently?

A traditional IRA. Contributions to a traditional IRA can help you save money on filing your taxes currently. Roth 401(k)s cannot, and health savings accounts are not retirement plans.

The W-4 federal tax form is used by _______.

Employers to pay withholding taxes to the government

There is one federal income tax rate that all taxpayers pay.

False. As you earn more money, your rate increases.

Only employees pay Social Security taxes on their earnings.

False. Employers pay the same amount on behalf of their employees, according to how much the employees pay.

Everyone must prepare a state income tax return.

False. If you live in a state that has a personal income tax, you must prepare a state income tax return. But not all states have that tax. Also, people living on land held in trust by the federal government may be exempt from state taxes.

Everyone will have to pay Social Security tax on all their income, no matter how much it is.

False. The amount of earnings one must pay tax on is capped, though it usually changes every year.

A _______ is one kind of contribution that can help save you money on your taxes.

Flexible spending account. A flexible spending account is one kind of contribution you can make that can help save you money on your taxes.

You can take a tax deduction for some education-related expenses. Which of the following does that include?

Interest paid on student loans Tuition Fees

Which saves you more money -- the standard deduction or itemized deductions?

It depends. For most people, the standard deduction saves more money. But for others, itemized deductions save more. When you do your taxes, you will find out which is better for you.

Having taxes withheld from your paycheck means you do not need to pay any more taxes.

Maybe. It depends on if you have overpaid or underpaid.

Which federal program provides health care coverage for all US citizens over the age of 65?

Medicare. Medicare is paid for in part by taxes on our income.

Social Security is a federal _______.

Retirement and disability income program, but not a health insurance program

If you are taking tax deductions for meals, car expenses, and travel, you are most likely _______.

Small business owners get to deduct a lot of expenses from their income, thus saving them money. This is one of the perks of being in business for yourself.

What is the value of taking personal exemptions when it comes to your taxes?

Taking personal exemptions reduces the amount of tax withheld from your paycheck. Those exemptions are valuable tax-savers.

What is the name of the United States' tax collection agency?

The Internal Revenue Service. The Internal Revenue Service is the agency that collects taxes for the United States.

Tax exemptions, adjustments, deductions and credits all have one thing in common. What is that?

They reduce the amount of tax you have to pay. Exemptions, adjustments, deductions and credits all reduce the amount of tax you have to pay. They all do this in different ways.

When you take time to engage in tax planning, you can save yourself money you would otherwise pay to the government in taxes.

True

Retired workers generally receive more in benefits from Social Security than they contributed to it during their working years.

True. They generally receive more; this is a big advantage during one's retirement years.

Many retirement plans are tax-deferred. This means that the earnings that build up in them are not taxed until you take them out.

True. To be tax-deferred means that taxes are not levied until sometime later; in the case of retirement plans, that means when you finally take the money out.

Several different tax forms that get sent to you will list the income you received during the year. Which of the following does NOT list income that you received?

W-4. Your W-4 does not list income you received. But your W-2s and any 1099s you receive will.

How do IRAs, 401k plans, health savings accounts and flexible spending accounts help lower your income taxes?

You get to deduct the money you contribute to them from your income. When you deduct the contributions you make to them, there is less money for you to be taxed on.

Personal information you will need to prepare your tax return includes _______.

Your Social Security number. Personal information you will need to prepare your tax return includes your Social Security number.